Interest rates remain the same for the third quarter of 2016

The Internal Revenue Service today announced that interest rates will remain the same for the calendar quarter beginning July 1, 2016. The interest rates will remain at 4% for overpayments (3% in the case of a corporation) and underpayments, 6% for large corporate underpayments and 1.5% for the portion of a corporate overpayment exceeding $10,000. The interest rates are computed by using the federal short-term rate based on daily compounding determined during April 2016. The rate of interest is determined on a quarterly basis. (Rev. Rul. 2016-12, IR-2016-84, IRB 2016-26, June 6, 2016.)

The states of Alabama and South Carolina follow the federal underpayment rate. Pennsylvania follows the federal rate in effect as of January 1 of the calendar year, without regard to quarterly changes. Illinois follows the federal underpayment rate as of January 1 and July 1 of the calendar year. Additionally, Virginia’s interest rate on tax underpayments is the federal interest rate plus 2%, while Arizona’s is the federal short-term rate plus three percentage points.